[url]http://www.businesstimes.com.sg/sub/news/story/0,4574,310502,00.html?[/url]

Published December 18, 2008

[B][SIZE="5"]Luxury brands offer big discounts to overcome shopping slump[/SIZE][/B]

By THEODORA KEE AND MARISSA LEE


(SINGAPORE) Once again, it's the holiday season, that special time of year when we practise age-old traditions, like trying to find a parking lot at the mall.

But will traditions change as consumer confidence plummets to its lowest in more than three years, as reported by the Nielsen Company?

To liven up the quiet season, high-end retail brands are offering storewide discounts of up to 70 per cent.

So far, this has kept a steady flow of shoppers in boutiques as they scour for bargains. But only brands that offer an enticing 50 per cent or more in discounts are seen to be enjoying better sales.

Premium brands Bally and Etienne Aigner kicked off their year-end sales earlier than usual, offering up to 50 per cent and 70 per cent discounts respectively.

Says Regina Aun, brand manager of Etienne Aigner: 'We launched our sales a week earlier than usual because of the current climate. We want to capture the early Christmas spenders.'

Some boutiques with on-going sales that BT spoke to report encouraging consumer response. Etienne Aigner says that it achieved a double-digit increase in sales during the period compared with last year.

Other luxury brands that have lower offers tell a different story.

'The economy has had a negative impact on retailers,' says a spokesman of Paris brand Lanvin. 'In comparison with last year's figures, we have seen almost a double-digit drop in sales.'

Lanvin is offering discounts ranging from 30 to 50 per cent.

But most remain optimistic and expect sales to pick up when Christmas draws closer.

Despite the positive response to good offers, consumers are still tightening their budgets. There are a few indications of this trend.

Club 21 says that customers have scaled their budgets down by 30-40 per cent. 'It is feedback from the stores,' says its spokesman. 'Instead of buying ten items, they are buying only five to six now.'

Club 21 is a high-fashion chain which runs a string of mono-brand boutiques including Armani, Balenciaga, Calvin Klein, Dolce&Gabbana.

Most luxury brands note that consumers are on the lookout for good value and are either buying lower-ticket items or are not buying as much as they used to.

'Customers used to buy three or more pairs of shoes in June because we are well-known for our shoes. But now, our customers are more conservative and are only buying what they need. Most are only buying one to two pairs,' says the spokesman for Ferragamo.

In good times, shoppers were more flamboyant in their spending habits. 'Previously, they would purchase a few different colours for one design. Now, they will only buy one colour for each pair,' says the Ferragamo's spokesman.

Retailers today have to think of different ways to keep customers coming.

Most boutiques have also brought in new stocks for the next season. But some are getting cold feet and are more cautious about future pre-orders because of the market's volatility.

As to sales projections for 2009, BT got a wide range of responses.

Says Etienne Aigner: 'We are still pretty upbeat because we know what our customers want and are pretty sure of that. We still expect an increase in our sales for 2009.'

Others are less certain and would be happy with single-digit sales growth next year.

Then there are those who have steeled themselves. 'The worst has not happened. We are still heading towards the worst of the recession,' says one. 'At the moment, it all looks very bleak. It would be a year from now before you see things stabilise.'